Confident in the team he’s built and the work it does, John Walton, president and co-owner of Advanced Laser Machining, has set the lofty goal of doubling his company’s business over the next five years.
This confidence does not stem from naiveté or blissful ignorance. Walton has been working in the precision metal fabrication business since high school.
In April 1996, the company that he worked for, CRD Precision Fabricators in Chippewa Falls, went under. In September 1996, he and Rod Tegels started ALM. It fabricates metal parts for military vehicles, supercomputers, airplanes — just about anything that can be made out of sheet metal.
“It’s a very dynamic, fast-paced business,” he said. “Never a dull moment.”
Biggest, baddest, best
Meeting this ambitious goal of doubling revenue in a tough economy means not resting on ALM’s collective laurels.
“The day you stop growing is the day you start dying,” Walton said.
ALM is currently booking $10 million a year in sales. Although Walton and Tegels could have been content with that level of sales, they realized that if they lost just one big customer, that $10 million could slide to $8 million. That, in turn, would leave their 58 employees without a full workload and idle expensive machines, and so on down a slippery slope.
Walton plans on hurdling that pitfall.
“The markets we serve are so vast, we don’t have one-tenth of one percent of what’s available,” he said. “There’s a lot more out there.”
Part of the reason Walton is talking about expanding when other manufacturing companies are contracting is that ALM services a broad range of the fabrication market.
Like many other companies, ALM hit the wall in October 2008. However, by not limiting itself to serving customers from only one segment of the market, ALM could absorb the inevitable loss of business from, for example, a struggling construction industry. Other sectors that are thriving make up for it.
“We don’t just supply home builders or heavy equipment or road construction,” Walton said. “We service supercomputers to airplanes to military vehicles to cement trucks. That’s a pretty broad scope, and hopefully one of those industries is hanging on enough to give you something to do.“
This broad scope is intentional, but Walton would like it to be even broader.
“We’ve got some concentrations in a few areas that’s too high, but in this economic climate, survive is the new thrive.”
Another key to ALM’s success has been its focus on using only the most cutting-edge machines. Walton said many of ALM’s competitors have an “artistic” approach, using craftsmen who have been around for years. However, when those competitors need to buy a new laser, they might save money by purchasing a used or a less advanced new machine.
“Our approach has always been the exact opposite,” Walton said. “We get the biggest, baddest, best machine with the most options, the bleeding edge of technology to continue to pull ourselves away from others who do the exact type of work.“
There are risks with this approach, of course. His company could spend seven figures on a work center that doesn’t pan out, although they have so far avoided this.
“In our world, it’s always a balancing act,” said Walton. “You can’t sell it if you don’t have it, and you can’t buy it if you haven’t sold it, so how do you get that next big fancy machine if you don’t have a use for it yet? Sometimes we buy the machines on speculation, and sometimes we buy the machines because we need an improvement over the way we’re doing things today, and it’s almost always a mix of the two.”
People buy from people
Despite the emphasis on that broad slice of the pie, Walton doesn’t want ALM to work with just anybody. He wants to have relationships with the right customers, which means working with people who are only interested in having their product delivered as promised and nothing else.
“We’re extremely proactive with our customers,” said Walton. “We’re telling them things about their own products that they don’t even realize, or bringing cost reductions to them that they didn’t ask for.”
In other words, Walton doesn’t want ALM to be just a vendor; he wants ALM to be part of a team with these customers, and that takes the right sort of customer.
ALM’s sales and service manager Troy Harvey explains this philosophy.
“We want to partner up with customers instead of just being, you know, Vendor No. 168,” he said. “We’re a partner, and when new projects come along we have insights to add to them. John and everyone else here is very good at taking what a customer does and saying, ‘Well, what if we do it this way instead and make it a better product, and we can give it to you at a better price?’ ”
“It doesn’t matter what the Wall Street Journal says — people still buy from people. If we have an opportunity with a customer, and we ship them a lot of stuff and all they say is, ’Next time do it for five percent less and a week earlier,’ and all they do is take, take, take, that’s not a relationship, that’s a dictatorship. We then fairly quickly try to get away from those guys because it’s obvious that they’re not in it for anything but their stockholders.”
Both Harvey and Walton credit a large part of ALM’s success to relationships among ALM’s employees. Employees are encouraged to work as part of the team and to generate ideas for how products may be improved.
“You can walk into one of the owners’ offices, and if you have an opinion or something to add, it’s well received,” Harvey said. “It’s the same way we treat our customers and our vendors. You’re a person, and you have value to add.”
To attract and retain the best employees, Walton tries to maintain a strong presence in the Chippewa Valley through local charity work and other good deeds, and he offers the best benefits and wage packages that he can. This can be a challenge, because although ALM’s employee pool is local (it draws talent from UW-Stout, UW-Eau Claire, and Chippewa Valley Technical College), its customers are national. Only about 20 percent of its customers are located in the state of Wisconsin.
“We’ve always tried to have a community presence so people in the Chippewa Valley know who we are, but unfortunately our customer market isn’t necessarily the Chippewa Valley,” said Walton. “If we don’t display the right façade, we end up with local people who want their rotor tiller fixed, and that’s not what we do. So we attempt to make an effort to show a real global presence. We work for Fortune 500 companies. We want to attract high-quality employees.”
Just as ALM focuses on getting the biggest, baddest and best lasers and machines, Harvey says it does the same with employees. Walton and Tegels get the best people they can find, and invest time and resources to hire and keep them.
Despite his presidential title, Walton himself feels like one of those employees, part of the team.
“I don’t walk into work and feel like the owner,” he said.